More Jurisdictions Are Banning Salary-History Inquiries

 

Jathan Janove, J.D. By Jathan Janove, J.D. April 4, 2019
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Requesting applicants' salary history has been standard practice for many employers that use this information to eliminate applicants from the hiring pool: "This person is too expensive." "At that low rate of pay, this person must be unqualified."

Employers have also used prior pay information to set compensation for new hires—a practice that may perpetuate the pay disparity between men and women.

To address gender pay disparity, a number of states and localities have recently enacted prohibitions on inquiring into such information, though these prohibitions vary in terms, scope and applicability.

States that have enacted some form of ban for private employers are California, Connecticut, Delaware, Hawaii, Massachusetts, Oregon and Vermont. Localities with these bans include Cincinnati (starting in 2020), New York City, Philadelphia (pending a legal challenge), Puerto Rico and San Francisco, as well as several counties in New York. Additionally, some states and localities ban salary-history inquiries from public employers only.

Here's how these laws are affecting HR professionals and employment attorneys around the country.

California

"California law specifically prohibits employers from requesting salary history, so we advise clients that if they want to get some idea of salary expectations, employers ask applicants about their expected salary," said Erica Rocush, an attorney with Lewis Brisbois in Los Angeles. This question does not violate California law and gives employers some idea of whether the potential candidate's expectations are in line with what is being offered.

"Employers should be careful even if asking this question, however," she added. Because women and minorities have traditionally earned less, their salary expectations may be correspondingly lower as well.

"Indeed, this is exactly what the salary-history bans are attempting to combat," Rocush noted. "So, a question regarding salary expectations can be asked to determine if a potential candidate expects a salary that fits within the offering range. It should not, however, be used to offer a lower salary to a candidate."

Additionally, California employers have to provide an open position's salary range to candidates if they request it, said Brenda Rushforth, SHRM-SCP, CHRO of Pomona College in Claremont, Calif. "The range we provide is the true budget range and not the salary grade range. It's nuanced but works well in setting those expectations."

New York

New York does not have a statewide ban on salary history for private employers. However, there are four jurisdictions that have enacted such bans. The first was New York City, where the law became effective Oct. 31, 2017. The NYC law prohibits employers from inquiring about a prospective employee's salary history during all stages of the application process, including in advertisements for positions, on applications or in interviews.

Albany County's ban went into effect on Dec. 17, 2017. At the pre-offer stage, employers with at least four employees are not permitted to seek the salary history of any job applicant from the applicant's current or former employers.

Westchester County's law went into effect on July 9, 2018, and Suffolk County's salary-history law goes into effect June 30. Notably, "significant exceptions present in the New York City law do not exist in the Suffolk County law," according to Jeffrey M. Schlossberg, a partner at Jackson Lewis P.C. For example, absent from the Suffolk County law is an exception that permits an employer to rely on salary history if an applicant makes an unprompted and willing disclosure. Additionally, the Suffolk County law does not carve out an exception that permits employers to discuss the applicant's salary expectations.

The New York State Assembly passed what would have been a statewide ban in 2018, but the companion bill did not pass the Senate. A statewide salary-history ban has a better chance of becoming law in 2019 with a fully Democrat-controlled Legislature, Schlossberg noted.

Oregon

In October 2017, the Oregon Equal Pay Act of 2017 went into effect. It prohibits employers from inquiring about or relying on salary history when setting compensation for new employees.

"Most Oregon employers have had to change their practices to comply with this new prohibition," said Paul Buchanan, an attorney with Buchanan Angeli Altschul & Sullivan in Portland, Ore. Changes include revising job application forms that asked about prior salary and training hiring managers not to ask about past pay in job interviews.  

"It's easy to make mistakes as it's pretty ingrained in most people's minds that an applicant's rate of pay in their prior position or positions is relevant in setting the salary in the new job," Buchanan said.

Michelle Valentis, director of recruiting and human resources at Reed College in Portland, Ore., lauds the new law. "Oregon's decision to outlaw asking for salary history is going to go a long way toward closing the gender pay gap," she said. "I'd take one step further, though, and encourage employers to list starting pay in the job posting." She feels that listing pay would put the onus on applicants to decide if they can afford the job, rather than on the employer to figure out if it can afford the applicant.

Some employers might balk at this, saying that they cannot post the pay for a job because they may pay more or less, depending on the applicant's experience and qualifications.

"I'd counter this argument by saying that we should pay people for the job they're doing today, rather than the jobs they did on their resumes," Valentis said.

Illinois

In 2017 and 2018, the Illinois Legislature passed legislation banning private employers from inquiring about salary histories. Both times, the former governor vetoed them.

This past January, on his first day in office, Gov. J.B. Pritzker signed an executive order that outlaws state agencies from requesting prior salaries. Rep. Anna Moeller, a co-sponsor of the previously vetoed bills, reintroduced the legislation to the Illinois General Assembly. The measure was approved by the state House of Representatives on March 13 and is currently being considered by the Senate.

Pennsylvania

While Pennsylvania does not currently have a statewide ban for private employers, Philadelphia became one of the first cities in the U.S. to ban questions about a prospective employee's wage history (the "inquiry provision") and also made it illegal for employers to rely on wage history to determine a salary for an employee ("reliance provision").

This ordinance was originally set to take effect in May 2017, but implementation was delayed while business groups challenged the ordinance in court. On April 30, 2018, a federal judge ruled that the inquiry provision of the ordinance was "at odds with the First Amendment" but upheld the reliance provision.

"Employers covered by the Philadelphia ordinance should consider eliminating salary-history questions from their hiring process or at least re-evaluating the purposes and uses of such information in order to implement measures that will ensure compliance with the prohibition against relying on such information when making compensation decisions," said Scott Hardy, an attorney with Ogletree Deakins in Pittsburgh.

Also of note: On March 18, 2018, Pennsylvania's governor issued an executive order that prohibits state agencies from asking applicants about their salary history.

Growing Trend

Employers in jurisdictions without salary-history bans should pay attention to this growing trend. Businesses may have employees in other states with bans or their jurisdiction may be considering a ban.

"Although Utah has no ban, some of our clients have employees in states that prohibit salary-history inquiries," said Michael O'Brien, an attorney with Jones Waldo in Salt Lake City.

These employers should consider whether they truly need salary-history information for legitimate business purposes in places where it still can be collected, he said. "If they do, and if it is worth the administrative cost, they should customize their hiring processes in the relevant states so they do not break local laws."

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